By Michael Gold
TAIPEI (Reuters) - Taiwan Semiconductor Manufacturing Co Ltd (TSMC) (TW:2330) (N:TSM) reported a 65 percent rise in first-quarter net profit on Thursday, beating analyst estimates, boosted by strong sales of iPhones from main client Apple Inc (O:AAPL).
The world's largest contract chip manufacturer booked T$79 billion ($2.54 billion) for January-March, compared with the T$77.8 billion average estimate of 22 analysts polled by Reuters.
The company also reported a quarterly revenue rise of 49.8 percent, as devices from watches to washing machines require more chips.
Shares of TSMC closed up 2.8 percent ahead of the earnings release, versus a 1.2 percent rise in the overall TAIEX (TWII) index.
Company-watchers are skittish about the firm's future as competition intensifies to produce the smallest, most energy-efficient chips against rivals Samsung Electronics Co Ltd (KS:005930) and Intel Corp (O:INTC).
Most agree TSMC lost orders to Samsung to produce chips for Apple's next-generation iPhone, likely due out this year. Estimates for TSMC's share in the next iteration of the hot-selling gadget range from 30 percent to 50 percent.
Samsung also last week said it opted for its own chips for its latest flagship phone over chips from Qualcomm Inc (O:QCOM), which contracts a large share of its production to TSMC.
Declining prices for smartphones worldwide may also drive handset makers to contract smaller players Semiconductor Manufacturing International Corp (HK:0981) and hometown rival United Microelectronics Corp (TW:2303) who offer more competitive prices for less-advanced technology, analysts say.